Internship at Nepal Investment Bank Limited

Full text

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An Internship Report

On

NEPAL INVESTMENT BANK LTD.

Putalisadak, Branch

Submitted To:

Modern Nepal College

Faculty of Management

Tribhuvan University

Kathmandu, Nepal.

Submitted By:

Narayan Sharma

Exam Roll No: 1784-005

TU Regd. No: 7-2-444-43-005

An Internship report submitted on partial fulfillment of the requirement for

the degree of undergraduate course in Bachelor in Business Administration

(BBA)

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Acknowledgement

It is difficult to draw up a list of persons to be thanked because several people have helped in preparation of this report in diverse ways. Knowledge itself is cumulative so it is difficult to acknowledge intellectual ideas. It is impossible to acknowledge all those who contributed to this study. But some persons need to be publicly acknowledged.

I am grateful to Tribhuvan University for initiating the internship program as the partial fulfillment of Bachelor of Business Administration that gives one the practical experience of real working environment and the application of the theoretical knowledge in the real work life.

It was a wonderful experience to do internship in Nepal Investment Bank Ltd. Foremost, I would like to express my heartfelt gratitude towards Ms. Era Subedi (Internship Supervisor of concern organization) and Mr. Shiva Bhakta Pokhrel (College Supervisor) who provided me with this opportunity

I would like to thank all the staffs of the organization for being so kind and co-operative towards me during my internship period. With the help of them I was able to learn much about the working area. I would also like to thank all the respondents for their courteous response for giving their valuable time and briefing about different respective topics

Finally, I like to present my sincere thanks to my family members and my friends for their co-operation, inspiration, guidance and support during all stages of the preparation of this report. Thanks all for your encouragement, support and warm cooperation.

Narayan Sharma BBA VIII Semester Modern Nepal College

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September 2009

Deceleration

I hereby declare that the internship report entitled, “An internship report on Nepal Investment Bank Ltd.” Submitted to Modern Nepal College, Faculty of Management, Tribhuvan University is my original work done in the form of partial fulfillment of the requirement of Bachelor of Business Administration under the supervision of Mr. Shiva Bhakta Pokhrel.

---Mr. Narayan Sharma Student

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Table of Content

Topics Page No.

Chapter One: Introduction 1

1.1 Background of the study 1

1.2 Objective of Internship 2

1.3 Limitations of the Study 2

1.4 Methodology of the Study 2

1.4.1 Placement 2

1.4.2 Organization Selection 3

1.4.3 Duration of Internship 3

1.5 Activities performed at NIBL 3

Chapter Two: Chapter Two: Introduction of Banking Industry 6

2.1 History of Banking 6

2.2 Origin of the word “Bank” 6

2.3 Definition of the Bank 6

2.4 Commercial role of Bank 7

2.5 Banking channels 7

2.6 Types of banks 8

2.7 Global banking 9

2.8 History of Banking in Nepal 11

2.9 Commercial Banking System in Nepal 12

Chapter Three: Introduction of the Organization 14

3.1 Introduction of the Bank 14

3.2 Vision of NIBL 15

3.3 Mission Statement of NIBL 15

3.4 Strategic Objectives of NIBL 15

3.5 Core values and Ethical Principles 15

3.6 Organization Structure of NIBL 16

3.7 Organization Structure of NIBL, Head Office 17 3.8 Organization Structure of NIBL, Putalisadak Branch 18

3.9 Products/Service of NIBL 19

Chapter Four: Analysis of Activities Done and Problem Solved 20

4.1 Customer Service Department 20

4.1.1 Saving Account 21

4.1.2 Fixed Account 23

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4.1.4 Supporting Services 25

4.1.5 Account Operations 25

4.1.6 Customer Complaints 27

4.2 Foreign Exchange Department 28

4.3 Cash Department (Back Desk)

4.3.1 Cheque Clearing Department. 29

4.3.2 Draft Department 30

4.4 Remittance Research and Development Department 31

4.4.1 Medium for Remittance 31

4.5 Trade Finance/Loan Administration Department 32

4.5.1 Lending procedure 36

4.6 Retail Bank Department 37

Chapter Five: Conclusion and Lesson Learnt 39

5.1 Conclusion 39

5.2 Lesson Learnt 39

5.3 Recommendation 40

Bibliography Annexure

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List of Tables Page No

Table 1.1: Duration of Internship 3

Table 2.1: Commercial Banks in Nepal 12

Table 3.1: Board of Directors of NIBL 16

Table 4.1: Types of account at NIBL 24

Table 4.2: Account Operations 26

Table 4.3: Customers Complaints 27

Table 4.4: Remittance from the Middle-East 30

List of Figures

Fig 3.1: Shareholding Structure of NIBL 14 Fig 3.2: Organization Structure of NIBL, Head Office 17 Fig 3.3: Organization Structure of NIBL, Putalisadak Branch 18

Fig 3.4: Product/Services of NIBL 19

Fig 4.1: Types of account at NIBL 24

Fig 4.2: Account Operation 27

Fig 4.3: Customers Complaints 28

Fig 4.4: Account at NIBL 37

Fig 4.5: Satisfaction level of customers 38

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Abbreviations

ABBS: Any Branch Banking Service ABK: Afnai Bachat Khata

AOA: Article of Association ATM: Automatic Teller Machine

BBA: Bachelor of Business Administration CA: Credit Application

CEO: Chief Executive Officer CIB: Credit Information Bureau CSD: Customer Service Department ESA: E-Zee Student Account ESvA: E-Zee saving Account GM: General Manager KBK: KetaKeti Bachat Khata LC: Letter of Credit

LSA: Lotus Saving Account MOA: Memorandum of Association NIBL: Nepal Investment Bank Limited NRS: Nepalese Rupees

NSA: Normal Saving Account PA: Per Annum

TT: Telegraphic Transfer TU: Tribhuvan University UAE: United Arab Emirates USD: United State Dollar

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Chapter One:

Introduction

1.1 Background of the study

Nepalese financial sector includes Central Bank, Commercial Banks, Finance Companies, Development Banks, Citizen Investment Trust, Provided Fund, Insurance Companies, Credit Unions, Loan Associations, etc. A Tribhuvan University’s BBA student can work as internee in any of the above sectors for fulfilling partial requirement of TU.

This study was conducted for partial fulfillment of the requirements for the degree of Bachelor of Business Administration (BBA) which carries six credit hours. The Internship program was authorized by Tribhuvan University, every student has to perform internship program any organization for a period of eight weeks. As a BBA student, I was assigned to an internship program at Nepal Investment Bank Ltd. The main objective of this internship program is to provide the students the practical knowledge regarding the real work life scenario and gain experience while working as the internee in the bank.

The internship program was started from 15 June 2009 to 15 August 2009. During the two months, I was given the opportunity to visit most of the departments. I was placed in Customer Service Department for two weeks, Draft Department for one week, Foreign Exchange Department for one week, Clearing Department for one week, Credit Department for one week, Remittance Department for one week and Retail Bank for one week Altogether I was placed in seven departments. The completion of eight weeks at NIBL gives me a professional experience as an internee in developing the interpersonal skills and working as a part of team. This report depict about the work and experience I have gained during two months at NIBL.

Details of Internship

Name and Address of the Organization: Nepal Investment Bank Limited

Putalisadak Branch, Putalisadak, Katmandu, Nepal. Tel: 4445302, 4445303

Fax: 4445304

Website: www.nibl.com.np E-mail: info@nibl.com.np Positions: Intern

Name and Designation of the Internship Supervisors:

Internal Supervisor: Mr. Shiva Pokhrel (faculty member, MNC) External Supervisor: Ms. Era Subedi (Relationship Manager, NIBL)

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1.2 Objective of Internship

The general objectives were:

1 To meet the partial fulfillment of the requirements for the degree of BBA of Tribhuvan University

2 To acquire and understand practical knowledge of working in an organization The specific objectives were:

1. To identify with the working environment of an organization 2. To understand the operation model of organization

3. To apply theoretical understanding from the class lectures in real practice 4. To build the professional working experience

1.3 Methodology of the Study 1.3.1 Organization Selection

As per the TU requirement, every BBA student should undergo internship program in any institution for minimum eight weeks. I was interested to work in banking sector as internee. I get a golden opportunity to work as internee at NIBL, Putalisadak Branch. For the selection of the organization, my college had great contribution. I had no any idea about the selection of organization for internship. I would like to express my heartfelt gratitude to my college family for recommending me at such a reputed bank like NIBL. NIBL was establishes in 1986 and was able to win the award “Bank of the Year” for three times in 2003, 2005 and 2008. It has good financial position in Nepalese financial market. Its head office was located at Darbur Marg, Kathmandu. Currently it has 30 braches inside and outside the valley and planning to establish 10 more branches in different part of the country by the end of 2009. Putalisadak branch is the largest branch among 30 branches. It serves large number of customer a day.

1.3.2 Placement

During my eight weeks at NIBL, I was given the golden opportunity to visit most of the departments. Currently at Putalisadak branch, altogether there are 10 departments. Customer Service Department, Draft Department, Foreign Exchange Department, Credit Department, Clearing Department, Card Department, Trade Finance Department, Remittance Department, Internal Audit Department and Retail Bank. But due to the time constraints, I could not worked at Card Department, Trade Finance Department and

Internal Audit Department. But I was visited rest of all the departments.

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As per TU requirement, a BBA student should undergo internship for minimum eight weeks. I have spent eight weeks at NIBL as internee. The duration of my internship was from 15 June, 2009 to 15 August, 2009. The detail of the duration of my internship can be shown below:

Table 1.1: Duration of Internship

Departments Duration

Customer Service Department 2 weeks

Draft Department 1 week

Foreign Exchange Department 1 week

Clearing Department 1 week

Credit Department 1 week

Remittance Department 1 week

Retail Bank 1 week

1.3.4 Activities performed at NIBL

As I have explained before, I was placed at different seven departments and performed different activities in those department which can be explained below:

1) Customer Service Department

Customer Service Department is the front desk of any organization. It deals with customers through account opening, ATM/Cheque Book issuing, balance certificate and balance statement issuing, etc. I have stayed two weeks in this department and performed following activities:

• Helping customers in filling the account opening form and vouchers • Keeping record of account holders manually

• Binding the cheque books

• Issuing cheque books and ATM cards to the clients • Signature scanning

• Printing balance certificate and balance statements • Taking the documents to respective person for signature

• Making phone calls to the clients for informing to collect the birthday cakes for KetaKeti Bachat Khata.

• Photocopying

2) Draft Department

Draft department is responsible for facilitating internal transfer, telegraphic transfer, demand draft and mail transfer. In this department I have worked for one week and performed the following activities:

1 Helping customers in filling form for demand draft, telegraphic transfer, internal transfer and good for payment

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2 Taking the documents to respective person for signature 3 Helping customers in filling vouchers

4 Issuing draft to clients and filing their record 5 Faxing the SWIFT document to head office 6 Photocopying

3) Foreign Exchange Department

Foreign Exchange Department is responsible for exchanging foreign currency for Nepalese rupees (NRS) and NRS for foreign currency according to need of the clients. In this department, I have performed following activities during one week:

1 Filling forms for traveling cheque 2 Filling the withdrawal slip

3 Photocopying 4

4) Clearing Department

Cheques from other banks and of NIBL are deposited in this department. During the period of one week I have performed following activities:

1 Making phone calls to the clients for informing about the cheque bounce 2 Accepting cheques for deposit

3 Sorting the documents that should be taken to central bank for clearing.

5) Credit Department

Customers visit this department if they need loan from the bank. Different varieties of loans are provided by the bank currently. I was placed in this department for one week and performed the following activities:

• Photocopying • Sending fax

• Tracking record of the customers whose insurance against security was going to be expired.

6) Remittance Department

The main function of remittance department is to accept the fund transfer buy the migrant workers from abroad to the family back home. During my one week in this department, I have performed the following activities:

• Sending fax • Photocopying

• Receiving fax and filing

7) Retail Bank

Activities related to marketing ere performed in retail bank department. I have gone to city centre, Kamaladi for promoting the services of the bank. I have performed the following activities there:

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• Convincing them to open account at NIBL

• Obtaining their satisfaction level from the services of NIBL, if the customers of NIBL were met.

1.4 Limitations of the Study

1 The eight weeks of short time period allocated leads to limited learning about an organization and working environment

2 Learning about working environment is deduced from an experience with one organization

3 Students do not have access to the reports of work done for the organization during internship

4 Learning during the internship period is guided by the requirement of the report to be submitted for the BBA degree fulfillment

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Chapter Two:

Introduction of Banking Industry

2.1 History of Banking

A bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money. Many other financial activities were allowed over time. For example banks are important players in financial markets and offer financial services such as investment funds. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In France, bancassurance is prevalent, as most banks offer insurance services (and now real estate services) to their clients.

The level of government regulation of the banking industry varies widely, with countries such as Iceland, the United Kingdom and the United States having relatively light regulation of the banking sector, and countries such as China having relatively heavier regulation (including stricter regulations regarding the level of reserves).

2.2 Origin of the word “Bank”

The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times.

Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending. Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts.

2.3 Definition of Bank

The definition of a bank varies from country to country. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:

• conducting current accounts for his customers

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• collecting cheques for his customers.

According to Oxford Dictionary, “a bank is an establishment or custody of money

received from of on behalf of its customers, its essential duty is to pay their draft on it, its profit arises from its use of money left unemployed by them.”

2.4 Commercial role of Bank

The commercial role of banks is not limited to banking, and includes:

• issue of banknotes (promissory notes issued by a banker and payable to bearer on demand)

• processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means

• issuing bank drafts and bank cheques

• accepting money on term deposit

• lending money by way of overdraft, installment loan or otherwise

• providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures

• safekeeping of documents and other items in safe deposit boxes

• currency exchange

• acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products

2.5 Banking channels

Banks offer many different channels to access their banking and other services:

• A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers.

• ATM is a computerised telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank.

• Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers.

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• Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity).

• Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website.

• Mobile banking is a method of using one's mobile phone to conduct simple banking transactions by remotely linking into a banking network.

• Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller machine), or via a videoconference enabled bank branch.

2.6 Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory responsibilities, such as supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.

Types of retail banks

Different types of retail banks include: 1. Commercial bank

The term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.

2. Community Banks

Locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners.

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Regulated banks that provide financial services and credit to under-served markets or populations.

4. Postal savings banks

Savings banks associated with national postal systems. 5. Private banks

Banks that manage the assets of high net worth individuals. 6. Offshore banks

Banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.

7. Savings bank

In Europe, savings banks take their roots in the 19th or sometimes even 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative; in others, socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralised distribution network, providing local and regional outreach—and by their socially responsible approach to business and society.

8. Building societies and Landesbanks Institutions that conduct retail banking. 9. Ethical banks

Banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.

10. Islamic banks

Banks that transact according to Islamic principles.

2.7 Global Banking.

Global banking and capital market services proliferated during the 1980s and 1990s as a result of a great increase in demand from companies, governments, and financial institutions, but also because financial market conditions were buoyant and, on the whole, bullish. Interest rates in the United States declined from about 15% for two-year U.S. Treasury notes to about 5% during the 20-year period, and financial assets grew then at a rate approximately twice the rate of the world economy. Such growth rate would have been lower, in the last twenty years, were it not for the profound effects of the internationalization of financial markets especially U.S. Foreign investments, particularly from Japan, who not only provided the funds to corporations in the U.S., but also helped finance the federal government; thus, transforming the U.S. stock market by far into the largest in the world.

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Nevertheless, in recent years, the dominance of U.S. financial markets has been disappearing and there has been an increasing interest in foreign stocks. The extraordinary growth of foreign financial markets results from both large increases in the pool of savings in foreign countries, such as Japan, and, especially, the deregulation of foreign financial markets, which has enabled them to expand their activities. Thus, American corporations and banks have started seeking investment opportunities abroad, prompting the development in the U.S. of mutual funds specializing in trading in foreign stock markets. Such growing internationalization and opportunity in financial services has entirely changed the competitive landscape, as now many banks have demonstrated a preference for the “universal banking” model so prevalent in Europe. Universal banks are free to engage in all forms of financial services, make investments in client companies, and function as much as possible as a “one-stop” supplier of both retail and wholesale financial services. Many such possible alignments could be accomplished only by large acquisitions, and there were many of them. By the end of 2000, a year in which a record level of financial services transactions with a market value of $10.5 trillion occurred, the top ten banks commanded a market share of more than 80% and the top five, 55%. Of the top ten banks ranked by market share, seven were large universal-type banks (three American and four European), and the remaining three were large U.S. investment banks who between them accounted for a 33% market share.

This growth and opportunity also led to an unexpected outcome: entrance into the market of other financial intermediaries: nonbanks. Large corporate players were beginning to find their way into the financial service community, offering competition to established banks. The main services offered included insurances, pension, mutual, money market and hedge funds, loans and credits and securities. Indeed, by the end of 2001 the market capitalisation of the world’s 15 largest financial services providers included four nonbanks.

In recent years, the process of financial innovation has advanced enormously increasing the importance and profitability of nonbank finance. Such profitability priorly restricted to the nonbanking industry, has prompted the Office of the Comptroller of the Currency (OCC) to encourage banks to explore other financial instruments, diversifying banks' business as well as improving banking economic health. Hence, as the distinct financial instruments are being explored and adopted by both the banking and nonbanking industries, the distinction between different financial institutions is gradually vanishing.

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Banking industry is the oldest service industry in Nepal. It has gone through various stages of evolution and development since the Vedic times. Though the modern banking institution has a very recent origin in Nepal, some crude bank operations were in practice even in the ancient times.

The first commercial bank of Nepal is Nepal Bank Limited, which was established in 1937. The government owned 51 percent of the shares in the bank and controlled its operations to a large extent. Nepal Bank Limited was headquartered in Kathmandu and had branches in other parts of the country.

There were other government banking institutions. Rastriya Banijya Bank (National Commercial Bank), a state-owned commercial bank, was established in 1966. The Land Reform Savings Corporation was established in 1966 to deal with finances related to land reforms.

There were two other specialized financial institutions. Nepal Industrial Development Corporation, a state-owned development finance organization headquartered in Katmandu, was established in 1959 with United States assistance to offer financial and technical assistance to private industry. Although the government invested in the corporation, representatives from the private business sector also sat on the board of directors. The Co-operative Bank, which became the Agricultural Development Bank in 1967, was the main source of financing for small agribusinesses and cooperatives. Almost 75 percent of the bank was state-owned; 21 percent was owned by the Nepal Rastra Bank, and 5 percent by cooperatives and private individuals. The Agricultural Development Bank also served as the government's implementing agency for small farmers' group development projects assisted by the Asian Development Bank (see Glossary) and financed by the United Nations Development Programme. The Ministry of Finance reported in 1990 that the Agricultural Development Bank, which is vested with the leading role in agricultural loan investment, had granted loans to only 9 percent of the total number of farming families since 1965.

Since the 1960s, both commercial and specialized banks have expanded. More businesses and households had better access to the credit market although the credit market had not expanded.

In the mid-1980s, three foreign commercial banks opened branches in Nepal. The Nepal Arab Bank was co-owned by the Emirates Bank International Limited (Dubai), the Nepalese government, and the Nepalese public. The Nepal Indosuez Bank was jointly owned by the French Banque Indosuez, Rastriya Banijya Bank, Rastriya Beema Sansthan (National Insurance Corporation), and the Nepalese public. Nepal Grindlays Bank was co-owned by a British firm called Grindlays Bank, local financial interests, and the Nepalese public.

Nepal Rastra Bank was created in 1956 as the central bank. Its function was to supervise commercial banks and to guide the basic monetary policy of the nation. Its major aims were to regulate the issue of paper money; secure countrywide circulation of Nepalese currency and achieve stability in its exchange rates; mobilize capital for economic development and for trade and industry growth; develop the banking system in the country, thereby ensuring the existence of banking facilities; and maintain the economic interests of

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the general public. Nepal Rastra Bank also was to oversee foreign exchange rates and foreign exchange reserves.

Prior to the establishment of Nepal Rastra Bank, Kathmandu had little control over its foreign currency holdings. Indian rupees were the prevalent medium of exchange in most parts of the country. Nepalese currency was used mostly in the Kathmandu Valley and the surrounding hill areas. The existence of a dual currency system made it hard for the government to know the status of Indian currency holdings in Nepal. The exchange rates between Indian and Nepalese rupees were determined in the marketplace. Between 1932 and 1955, the value of 100 Indian rupees varied between Rs71 and Rs177. The government entered the currency market with a form of fixed exchange rate between the two currencies in 1958. An act passed in 1960 sought to regulate foreign exchange transactions. Beginning in the 1960s, the government made special efforts to use Nepalese currency inside the country as a medium of exchange.

It was only after the signing of the 1960 Trade and Transit Treaty with India that Nepal had full access to foreign currencies other than the Indian rupee. Prior to the treaty, all foreign exchange earnings went to the Central Bank of India, and all foreign currency needs were provided by the Indian government. After 1960 Nepal had full access to all foreign currency transactions and directly controlled its exports and imports with countries other than India.

As a result of the treaty, the government had to separate Indian currency (convertible currency because of free convertibility) from other currencies (nonconvertible currency because it was directly controlled by Nepal Rastra Bank). In 1991 government statistics still separated trade with India from trade with other countries. Tables showing international reserves listed convertible and nonconvertible foreign exchange reserves separately.

2.9 Commercial Banking System in Nepal

Commercial bank is the oldest form of bank. Bank that performs all kinds of banking business and generally finances trade and commerce is called commercial bank. It occupies an important place in the framework of every economy. Commercial bank accepts deposit from public and provide loan to them. It acquires fund from surplus saving unit to deficit spending unit. The main objective of commercial bank is to earn profit which is achieved from spread margin.

Nepal bank limited is the first commercial bank in Nepal which was established in 1937 A.D. The lists of commercial banks licensed by NRB are:

Table 2.1: Commercial Banks in Nepal

Sn Commercial Banks Establishment Date(BS) Head Office

1 Nepal Bank Limited 1994/07/30 Katmandu

2 Rastriya Banijya Bank 2022/10/10 Katmandu

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4 Nepal Investment Bank Limited 2042/11/16 Katmandu 5 Standard Chartered Bank Nepal

Limited

2042/10/16 Katmandu

6 Himalayan Bank Limited 2049/10/05 Katmandu 7 Nepal SBI Bank Limited 2050/03/23 Katmandu 8 Nepal Bangladesh Bank Limited 2050/02/23 Katmandu

9 Everest Bank Limited 2051/07/01 Katmandu

10 Bank of Katmandu Limited 2051/11/18 Katmandu 11 Nepal Credit and Commerce Bank

Limited

2053/06/28 Siddarthanagar 12 Lumbini Bank Limited 2055/04/01 Narayanghad 13 Nepal Industrial and Commercial

Bank Limited

2055/04/05 Biratnagar 14 Machhapuchre Bank Limited 2057/06/17 Pokhara

15 Kumari Bank Limited 2056/08/24 Katmandu

16 Laxmi Bank Limited 2058/06/11

17 Siddhartha Bank Limited 2058/06/12 Katmandu 18 Agriculture Development Bank

Limited

2024/10/07 Katmandu

19 Global Bank Limited 2063/09/18 Birgunj

20 Citizen Bank International Limited 2064 Katmandu 21 Prime Commercial Bank Limited 2064 Katmandu

22 Bank of Asia Limited 2064 Katmandu

23 Sunrise bank Limited 2064 Katmandu

24 Nepal Merchant Bank 2065 Katmandu

25 Development Credit Bank 2065 Katmandu

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Chapter Three

Introduction of the Organization

3.1 Introduction of the Bank

Nepal Investment Bank Ltd. (NIBL), previously Nepal Indosuez Bank Ltd., was established in 1986 as a joint venture between Nepalese and French partners. The French partner (holding 50% of the capital of NIBL) was Credit Agricole Indosuez, a subsidiary of one the largest banking group in the world.

With the decision of Credit Agricole Indosuez to divest, a group of companies comprising of bankers, professionals, industrialists and businessmen, has acquired on April 2002 the 50% shareholding of Credit Agricole Indosuez in Nepal Indosuez Bank Ltd.

The name of the bank has been changed to Nepal Investment Bank Ltd. upon approval of bank’s Annual General Meeting, Nepal Rastra Bank and Company Registrar’s office with the following shareholding structure.

 A group of companies holding 50% of the capital  Rashtriya Banijya Bank holding 15% of the Capital.  Rashtriya Beema Sansthan holding the same percentage.

 The remaining 20% being held by the General Public (which means that NIBL is a

Company listed on the Nepal Stock Exchange).

General Public 20% Rashtriya Banijya Bank 15% Different Companies 50% Rashtriya Beema Sansthan 15%

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NIBL forged itself into the introduction of many innovative approaches as for rendering the premium services and satisfaction using proper marketing concepts throughout the period. Represented as the milestone in the banking history in Nepal, NIBL primarily focuses and sets an objective to provide better services to its overall customers.

3.2 Vision of NIBL

"Our Vision is to be the most preferred provider of Financial Services in Nepal".

3.3 Mission Statement of NIBL

To be the leading Nepali Bank, delivering world class service through the blending of stat-of-the art technology and visionary management in partnership with competent and committed staff, to achieve sound financial health with sustainable value addition to all our stakeholders. NIBL is committed to do this mission while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance.

3.4 Strategic Objectives of NIBL

• To develop a customer oriented service culture with special emphasis on customer care and convenience

• To increase the market share by following the discipline growth strategy

• To leverage the technology platform and open scalable system to achieve cost effective operations, efficient MIS, improve delivery capability and high service standards.

• To develop innovative product and service that would attract targeted customer and market segment.

• To continue to develops product and services that would reduce the cost of fund.

• To maintain a high quality asset portfolio to achieve strong and sustainable returns and to continuously build shareholders value.

• To explore new avenues for growth and profitability.

3.5 Core values and Ethical Principles

The core values lets the institute, customers and communities know what they serve, who they really are and the principles by which they pledge to conduct business. In essence, the bank believes that the success can only be achieved by living their core values and principles:

1 Customer focus

At NIBL, the prime focus is to perfect the customer service. Customers are their first priority and driving forces. So, they wish to gain customer confidence and be their trusting partner.

2 Quality

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They believe that the quality service experience is paramount to their customer and are strongly committed in fulfilling this ideal.

3 Honesty and Integrity

At NIBL, they ensure higher level of integrity to the customer, creating an ongoing relationship of trust and confidence with a belief of treating each customer with honesty, fairness and respect.

4 Belief in staff

At NIBL, every staffs are recognized as important assets and competitive strengths and their worth and dignity are respected for the progress of the bank.

5 Teamwork

NIBL is a firm believer in teamwork and feel that loyal and motivated teams can produce extraordinary results. They are driven by a performance culture when recognition and rewards are based on individual merit and demonstrated track record.

6 Good Corporate Governance

Effective Corporate Governance procedures are essential to achieve and maintain public trust and confidence by following best practice.

7 Corporate Social Responsibility

NIBL is committed to behave ethically and contribute towards the improvement of quality of life of people, community and greatly the society.

3.6 Organization Structure of NIBL

(table no on top and fig no on bottom)

Table 3.1: Board of Directors of NIBL

Board of Directors

Prithivi Bahadur Pande Chairman/Chief Executive Director Mr. Prajanya Rajbhandari Director

Mr. Deepak Man Serchan Director Mr. Krishna Prasad Sharma Director Dr. Shiva Hari Shrestha Director Mr. Surendra Bdr. Singh Director

Mr. Damodar Prasad Sharma Pandey Professional Director

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3.7 Organization Structure of NIBL, Head Office

Fig 3.2: Organization Structure of NIBL, Head Office

Chairman and CEO

Senior GM

Senior GM Senior GM

GM

Assistant GM Deputy GM (Credit/Retail) Deputy GM (Operation)

Head Retail Head Corporate

Customer

Service Head Trade

Customer

Finance Head Credit

Deposit Marketing

Branch Coordinator

Head H/R Branch Credit

Head HR Head Loan Assistant GM Assistant GM Head Corporate Head Corporate Head Corporate

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3.8 Organization Structure of NIBL, Putalisadak Branch

Fig 3.3: Organization Structure of NIBL, Putalisadak Branch

Branch Manager

Assistant Branch Manager

Trade Finance Department Corporate Department Officer In Charge Customer Service Department Operation Card Centre Remittance Department Officer In

Charge Officer In Charge Officer In Charge Officer In Charge Officer In Charge

Jr. Officer

(R M) Jr. Officer (R M) Sr. Assistant Mgmt. Trainee Sr. Assistant Mgmt. Trainee Sr. Assistant

Assistant /Teller Supervisor/Head Teller

Clearing /Foreign

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3.9 Products/Service of NIBL

Fig 3.4: Product/Services of NIBL Remittance

Tele Banking Service Bills purchase

Clearing/ Collection of Cheque

Dedposits

Locker Facility

Any branch Banking Service

Import and export credit Bank Guarantee

NTC Mobile Bill Payment

ATM Card Loans and Advances

Credit Card E- banking Services 365 Days Banking Premier Banking

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Chapter Four

Analysis of Activities Done and Problem Solved (arrange all in this gap)

During the period of two months at NIBL, I was given the opportunity to be placed in Customer Service Department, Draft Department, Foreign Exchange Department, Clearing Department, Credit Department, Remittance Department and Retail Bank. Altogether I was placed in seven departments. The activities done in these departments can be explained below:

4.1 Customer Service Department

Customer service department serve as the important department of any organization. It is the front desk of any organization. The ultimate goal of any organization is to satisfy the customers. So any institutions try their best in making positive impression to the clients. The image and reputation of the bank depends upon the way how the staffs in this department behave with clients. So the ultimate goal of the organization can be achieved through efficient functioning in customer service department.

During the period of two months (15 June- 15 August), I was placed for two weeks in customer service department. During that period, I was given the chance to perform the following activities:

• Helping customers in filling the account opening form and vouchers • Keeping record of account holders manually

• Binding the cheque books

• Issuing cheque books and ATM cards to the clients • Taking the documents to respective person for signature

• Making phone calls to the clients for informing to collect the birthday cakes for KetaKeti Bachat Khata.

• Photocopying

Sometimes, I was given the chance to work with computer. At that time, I have to do following tasks:

• Signature scanning

• Printing balance certificate and balance statements • Tracking record of e-banking service taken by clients.

But most of my time was spent in making photocopy of the document and taken it to the respective person for signature. Along with this, I was given the task of making phone calls to the clients and informing them about the improper signature in access card for account opening.

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For the easiness of customers, customer service department offers various types account:

4.1.1 Saving Account

NIBL provides the saving account for the purpose of meeting the needs of surplus saving unit. Only the individuals can open this type of account. NIBL provides various types of saving accounts:

a) Afnai Bachat Khata (ABK)

Afnai Bachat Khata has the following features:

• Customers can open account with minimum balance of NRS 1 • It provides interest of 2% P.A. on monthly minimum balance. • ATM Debit card is compulsory for this account

• Debit card is valid in Nepal and India

• In India and other than NIBL ATM, charge per transaction is NRS 150 or 0.5% (whichever is higher)

• Transaction through Kumari Bank Rastriya Banijya Bank’s ATM possible with charge of NRS 10 per transaction.

• Cheque book is issued only after holding NRS 50,000 on request. • No maintenance charge is required

• Debit card issuance charge NRS 200 P.A.

• Any Branch Banking Service (ABBS) is free with in the valley. • Free E- Banking facility

• Account will be blocked if no withdrawal is made more than six months • Interest is paid semiannually (ashad end and poush end)

b) KetaKeti Bachat Khata (KBK)

KBK has the following features:

1 NRS 100 is to be contributed from the bank with every account opened in the child’s name.

2 It provides interest of 3% P.A. on monthly minimum balance. 3 The account is the operative account to be maintained by the

parents/guardians

4 The account matures when the child matures 16 years and is converted into saving account.

5 Birthday cake will be provided by the bank on the birthday o the child 6 All clients will be issued the VISA Debit Cars with an insurance fee of NRS

200 P.A.

7 All clients will be issued with a privilege card with the photo of the child, account name and validity

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c) Lotus Saving Account (LSA)

KBK has the following features:

• Customers can open account with minimum balance of NRS 1000 • It provides interest of 2.25% P.A. on monthly minimum balance. • ATM Debit card is compulsory for this account

• Debit card is valid in Nepal and India

• In India and other than NIBL ATM, charge per transaction is NRS 150 or 0.5% (whichever is higher)

• Transaction through Kumari Bank Rastriya Banijya Bank’s ATM possible with charge of NRS 10 per transaction.

• Maintenance charge of NRS 50 semi annually is required (ashad end and poush end)

• Debit card issuance charge NRS 200 P.A.

• Any Branch Banking Service (ABBS) is free with in the valley. • Free E- Banking facility

• Account will be blocked if no withdrawal is made more than six months • Interest is paid semiannually (ashad end and poush)

d) E-Zee Student Account (ESA)

ESSA has the following features:

• Customers can open account with minimum balance of NRS 2000 • It provides interest of 2.5% P.A. on monthly minimum balance. • ATM Debit card is compulsory for this account

• Debit card is valid in Nepal and India

• In India and other than NIBL ATM, charge per transaction is NRS 150 or 0.5% (whichever is higher)

• Transaction through Kumari Bank Rastriya Banijya Bank’s ATM possible with charge of NRS 10 per transaction.

• Maintenance charge of NRS 50 semi annually is required (ashad end and poush end)

• Low balance charge NRS 300 per month (Below NRS 2000) • Debit card issuance charge NRS 200 P.A.

• Any Branch Banking Service (ABBS) is free with in the valley. • Free E- Banking facility

• Account will be blocked if no withdrawal is made more than six months • Interest is paid semiannually (ashad end and poush)

• There is no cheque book facility in ESA.

e) Normal Saving Account (NSA)

Normal Saving Account has the following features:

• Customers can open account with minimum balance of NRS 10,000 • It provides interest of 2.5% P.A. on monthly minimum balance. • Debit card issuance charge NRS 200 P.A.

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• In India and other than NIBL ATM, charge per transaction is NRS 150 or 0.5% (whichever is higher)

• Transaction through Kumari Bank Rastriya Banijya Bank’s ATM possible with charge of NRS 10 per transaction.

• Account will be blocked if no withdrawal is made more than six months • Maintenance charge of NRS 50 semi annually is required (ashad end and

poush end)

• Cheque book facility is available

• NRS 300 is levied for uncollected cheque book after 90 days. • Any Branch Banking Service (ABBS) is free with in the valley. • Free E- Banking facility

• Interest is paid semiannually (ashad end and poush)

• Low balance charge NRS 300 per month (Below NRS10,000)

f) E-Zee Saving Account (ESvA)

ESA has the following features:

• Customers can open account with minimum balance of NRS 50,000 • It provides interest of 2.75-4% P.A. 0n daily balance (condition apply) • Any Branch Banking Service (ABBS) is free

• ATM Debit card is free for this account • Debit card is valid in Nepal and India

• Provide the facility if accidental insurance coverage of NRS50,000 • No key deposit for lockers

• Unlimited withdrawal facility is possible

• Low balance charge NRS 500 per month (Below NRS50,000) • NRS 300 is levied for uncollected cheque book after 90 days. • Maintenance charge of NRS 50 is required semi annually • Any Branch Banking Service (ABBS) is free of cost • Free E- Banking facility

• Account will be blocked if no withdrawal is made more than six months • Interest is paid semiannually (ashad end and poush end)

4.1.2 Fixed Account

If the customers want to deposit their cash for fixed period of time i.e. 1 year, 2 year, 5 year, 10 year ,20 year etc. then they can open fixed account. Generally interest rate is higher in fixed account. The interest rate range from 1.25% for 1 year maturity deposit to as high as 5% to maturity above two years. If the customer wants to withdrawal cash before the maturity, bank will charge extra charge.

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NIBL provides the facility of current account targeting at the business organization. It is also called checking account. Account holders will not get any interest and is used for the transaction purpose.

Features:

1 Provides the cheque book for transaction purpose 2 Provides Visa Debit Card

3 Tele banking facility is available

During my two weeks in customer service department, 279 customers visited NIBL for opening account. The detail is presented below:

Table 4.1: Types of account at NIBL

Types of Account No of Customers Afnai Bachat Khata (ABK) 201

KetaKeti Bachat Khata (KBK) 31 Lotus Saving Account (LSA) 32 E-Zee Student Account (ESA) 0 Normal Saving Account (NSA) 6 E-Zee Saving Account (ESvA) 2

Current Account (CA) 7

Total 279 0 50 100 150 200 250

ABK KBK LSA ESA NSA ESvA CA

Types of Accounts N o o f C u st o m er s

fig 4.1: Types of account at NIBL

Above table and chart shows that a large number of customers visit NIBL for opening ABK. During two weeks, out of 279 customers, 201 customers opened ABK, 31 opened

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KBK,32 opened LSA, no customers opened ESA, 6 customers opened NSA, two customers opened ESvA and seven customers opened current account.

4.1.4 Supporting Services

NIBL provides the following services and documents on demand for facilitating these accounts:

1. Cheque Book

For the withdrawal of cash deposited in their account, NIBL provides the facility of cheque book. During the two weeks, I found about 20 customers request for cheque book. For issuing cheque, first of all it should be recorded in the cheque book register.

2. ATM Cards

Most of the accounts provide the facility of Visa Debit Card. So the customer requesting for ATM card is high. Everyday about 35 customers come to collect ATM card. ATM of NIBL can be operated in any ATM machine of Visa Company.

3. Balance Statement

NIBL issue the balance statement to the client on demand. This statement is distributed if the customer wants to know about the amount debited and credited in their account. It has no any other purpose. Every day 30-40 customers visit to collect balance statement.

4. Balance Certificate

Balance Certificate is distributed to clients mainly for visa purpose. A form should be filled by the clients for balance certificate. For a balance certificate, client is charged Rs 500 if account opening crosses three months and Rs 800 if duration of account opening is less than three months. Every day about 20-30 clients visit bank for balance certificate.

5. E-Banking User ID Distribution

Through E- banking facility, clients can check their balance through internet. For this they will get user password form customer service department. NIBL has its own website through which it will connect to the clients. The client can use the site to conduct transaction on their account.

4.1.5 Account Operations

NIBL performs two activities for account operation. They are:

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Account opening is the important task of banking institutions. Every day 30-40 customers come to NIBL to open account. The following documents are to be submitted while requesting for opening the account:

• Photocopy of citizenship certificate of the account holder • Three photographs

• List of office bearer and address (in case of club society and association) • Copy of by-law/constitution (in case of club society and association) • Certificate of registration and renewal certificate (in case of club society

and association)

• Deceleration of sole proprietorship (in case Sole trading)

• Certificate of registration and renewal certificate (in case Sole trading) • Letter of partnership duly signed by all partners (in case of Partnership) • Memorandum and article of association (in case of Company)

• Resolution of BOD to open and operate the account (in case of Company) • List of directors duly signed by respective directors (in case of Company) • Company registration paper of account operator (in case of Company) • Income tax registration/renewal certificate (in case of sole trading,

Partnership and Company)

2. Account Closing

Customers do not open account only; sometimes they close the existing account. Every day 3-4 customers come to the bank to close the account. They do so if they were not satisfied with the services provided by the bank. Another reason is increasing competitors. Customers should go through the following process to cancel their account:

1 Customers willing to close the account must fill up the form specifying the reason

2 Customers are asked to return the belongings like Cheque Book, ATM Card etc

3 Bank charge certain charge for account closing 4 Finally closed the account.

During the two weeks in CSD, I kept the record of number of customers opening and closing the account. The detail is presented below:

Table 4.2: Account Operations Account Operations No of Customers Account opening 279

Account Closing 27

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Account Operations Account opening 91% Account Closing 9%

Fig 4.2: Types of account at NIBL

During my two weeks at customer service department, out of 306 customers, 91% came for account opening and 9% came for closing account.

4.1.6 Customer Complaints

Some times customers will face the problem while taking the services of NIBL. I have conducted the survey about the problems faced by the customers. I have asked the respondents who came to the counter of the bank about the problem created from the services of NIBL. The detail is presented in the form of table and chart below:

Table 4.3: Customers Complaints

Customers’ complains No of Customers

Late delivery of ATM 12

Not friendly staffs 6

High renewal charge of ATM 4

No clear information 2

No provision for illiterate and sightless 1 Necessary for Introducer’s Deceleration 9

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Customers' complains 0 2 4 6 8 10 12 14 Late delivery of ATM Not friendly staffs High renewal charge of ATM No clear information No provision for illiterate and sightless Necessary for Introducer’s Deceleration Complains N o o f C u st o m er s

Fig 4.3: Customers Complaints

Above table and chart shows that most of the customers faced the problem related to ATM cards. Out of the total respondents, 16 respondents had the problem related to ATM; six respondents argued staffs are not friendly, two respondents responded that information provided by the bank is not clear. There is no provision of account for illiterate and sightless person (those who can not make sign). One respondent had this problem and nine customers responded that they can’t provide the introducer’s deceleration.

4.2 Foreign Exchange Department

From its name it is clear that foreign exchange department is responsible for exchanging foreign currency i.e. buying and selling foreign currency. Buying rate is differing from selling rate. Selling rate is slightly higher than buying rate.

a) Selling of Foreign Currency

Selling foreign currency means providing foreign currency for Nepalese currency. Customers should require different documents for exchanging foreign currency with Nepalese currency. But Indian currency can be exchanged without any criteria. For other currency following documents are required:

• Airway ticket for the respective country, whose currency is to be exchange.

• Photocopy of passport.

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Buying foreign currency means providing Nepalese currency for foreign currency. Bank only buy the foreign currency from those who were already visited to the respective country. Without that bank will be unable to exchange foreign currency. Following documents are to be submitted by the customers for enabling the bank to buy foreign currency from them:

1 Return airway ticket from respective country 2 Photocopy of passport.

Bank does not charge any commission for exchanging foreign currency. The gap between selling and buying is the benefit for the bank. During my internship period, I found foreign exchange department very crowd.

Travelers Cheque

NIBL offers "American Express Traveler's Cheque" that is accepted worldwide.

4.3 Cash Department (Back Desk)

Cash Department (back desk) includes the following:

4.3.1 Cheque Clearing Department

In Cheque clearing department, the cheque from different banks including NIBL are presented for deposit. I have got the opportunity to stay one week in this department. Every day about 20-30 cheques were deposited during my one week in this department. For depositing the cheque, simply customers have to fill up the voucher with the amount of cheque. Once the cheque is deposited in the bank, if the cheque is of NIBL, his/her account is directly credited with the amount of cheque. If it is of other bank, then it will be send to Nepal Rastra Bank for clearing. At NRB, all the banks who accept the cheque of other banks are presented for clearing it. At NRB there are separate desks for each institution. In the desk of NIBL, all the cheques of NIBL which are deposited in other banks are placed together. Then they are sending to NIBL which is called inward clearing. Those cheques are treated like normal cheque i.e. NIBL debit the amount of cheque of from the depositors’ account with the amount of cheque and inform to NRB. Then NRB pay cash to the depositor bank. Then after that bank credit the account of clients with the amount of cheque. Sometimes, NIBL will bounce its cheques collecting from other banks. In this case, the cheque is send to the bank where it is collected. Account holders have to pay Rs. 205 of the cheque is bounced. The reason for bounce of cheque can be pointed below:

1 Improper signature

2 Cheque post added (cheque is to be paid later) 3 Expired cheque

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5 Improper amount in words

Types of Cheque Clearing

There are two types of clearing. They are:

1. Inward Clearing

If the cheque of NIBL is deposited in other banks and finally comes to NIBL for clearing, it is called inward clearing. It takes two days for inward clearing.

2. Outward Clearing

If the cheque of other bank is deposited in NIBL, then it should be send to respective bank for clearing, which is called outward clearing. It takes two days for outward clearing.

Draft Department

Draft is the mechanism for sending money from one place to another place. NIBL is also providing good facility of draft. Draft can be send both inside and outside the country. No documents need to submit for sending draft in Nepal and India. At NIBL, students are the major clients for draft. Draft can be sending far any purpose in Nepal and India but in other country it is only for study purpose. This department is responsible for performing following activities:

a) Demand Draft

NIBL has draft drawing arrangement with its correspondent banks in different countries. NIBL honors bank drafts drawn on/by various international banks denominated in major currencies like US Dollar, Euro,

Great Britain Pound, etc.

b) Telegraphic Transfer/ SWIFT

NIBL offers fast and reliable money transfer services through SWIFT. Customers’ bank account with NIBL can be credited with remittance from anywhere in the world. The remitter has to mention the NIBL's SWIFT Address "NIBLNPKT" and the beneficiary details to transfer money to Nepal through NIBL. NIBL caters the need of customers to remit fund anywhere in the world, denominated in major currencies, through SWIFT.

c) Internal Transfer

NIBL offers the service of internal transfer. Customers can transfer their fund from one account to another account of the bank.

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Good for payment refers to the facility that bank guaranteed the payment to the person who provide fund to another who have account at NIBL.

4.4 Remittance Research and Development Department

During the period of eight weeks, I was given the chance to work in remittance department for one week. The main function of remittance department is to accept the fund transfer buy the migrant workers from abroad to the family back home. During my one week in this department, I have learned to do the following activities:

4 Sending fax 5 Photocopying

6 Receiving fax and filing

Remittance is the main source of government revenue. Every year about two Arabs dollar import in Nepal from foreign country.

Nepal Investment Bank Limited (NIBL), operating under the guidelines set by The Government of Nepal and Nepal Rastra Bank (the Central Bank of Nepal), offers one of the safest and the most secured means of money transfer to Nepal. Remitters can send money to NIBL from any part of the globe through our correspondent banks, exchange houses and banks in the Middle East and using Prithivi Express, our in-house remittance software.

4.4.1 Medium for Remittance

There are two medium for remittance in Nepal; official medium and un-official medium. Official medium includes banking channels and un-official medium includes personal delivery i.e. Hundi, which is illegal medium of remittance.

NIBL offers account-opening facilities for Non-Resident Nepalese expatriates with zero balance. To open an account, submit the following documents at any of its

Correspondents:

- Application Form, duly filled.

- Three recent passport size photographs - The attested copy of your passport

How to send money?

1 Visit the nearest branch of our Remittance Correspondent 2 Fill up a form with the following details:

• The Remitter's full name and address

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• The full name, address, telephone number and account number (if available) of the person in Nepal who will receive the money

1 Customers will receive a secret Code that should be given to the beneficiary (person receiving money) in Nepal

How to receive money in Nepal?

2 Customers can collect their money on the same day from any of our branches and agents

3 Simply, visit NIBL’s nearest Branch/Agent with

• The secret code given to you by the remitter.

• The original passport, citizenship certificate, or any other identification issued by The Government of Nepal.

4.5 Trade Finance/Loan Administration Department

Trade finance/loan administration department, also called credit department

basically deals with the corporate loan. But also provide individual loan. During my one week in this department, bank did not provide any loan because of the end of the fiscal year. So I could not observe the lending procedures directly.

NIBL provides a large amount loan to the corporations. About 40% of the loan is provided to Todi Group (Rishi Exim Int’l Pvt.Ltd., varun Udhyog Pvt. Ltd., Vinayak Argo p. Ltd., Hanuman Metal p. Ltd., Harisiddi paints P. Ltd., etc.) Bank charge certain percent of interest depending upon the terms and conditions of loan. Currently, various types of loan are provided by the bank; overdraft, term loan, education loan, home loan, trust receipt, bank guarantee, letter of credit, hire purchase, bill purchase, etc. bank requires the following documents from clients in order to provide the corporate loan:

1 Request letter

2 Financial statement (last 2 year P/L and B/S) 3 Bank statement (last one year)

4 Name of father and grandfather of the proprietor/shareholders 5 Registration certificate

6 VAT/PAN certificate 7 Income tax certificate

8 MOA/AOA (for private limited company only) 9 Broad resolution with borrowing power

10 Citizenship copy

11 Receivable statement (if applicable) 12 Stock statement (if applicable) 13 Title deed copy (if applicable)

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14 Malpot receipt 15 Blue print 16 Four boundaries

17 Building approval letter 18 Building drawing

NIBL deals with both funded and non- funded loans which can explained below:

1. Funded Loan

Funded loan refers to those types of loan, in which bank provides fund to the clients. It includes:

a) Overdraft

Overdraft refers to the credit limit given by the bank to the customers for the purpose o financing working capital needs. It is of one year and can be renewal each year. Bank charges 13% interest rate to the clients. Customers can withdrawal any amount up to that limit. Interest is charged on withdrawal amount not on the limit. The limit is determined based on sales, profit, net worth and credibility of the borrower. If the borrower has good credibility, extra 5% of the limit is lent for one week. Borrowers can drawdown the amount i.e. borrow, repay, and reborrow.

b) Term Loan

NIBL lend certain amount to the clients for fixed period such as 1 year, 2b year, 5 year, 10 year, 15 year, etc. Bank finance the investment in any project. Term loan is of three types:

Short Term Loan: Short Term Loan is of one year and charge

13% interest p.a.

Mid Term Loan: Mid Term Loan is of one to five years and charge 13% interest p.a.

Loan Term Loan: Loan Term Loan is of more than five years

and charge 13% interest p.a.

In term loan 100-130% collateral is to be maintained.

c) Education Loan

Education loan is provided by the bank to the students to meet the fees declare by the college and university. Borrowers can borrow the loan backed by the securities equal to 100-130% of the loan. They need to submit the offer letter from the college declaring the amount of fee. Mainly, students going abroad take education loan. Education loan charges 11% interest p.a.

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d) Home Loan

NIBL provides loan for constructing building that may be for project financing or personal. Bank charges 10.5% interest for home loan up to five years and 11.5% for more than five years.

e) Hire Purchase

NIBL also provides vehicle loan to its clients. NIBL offers the following services for vehicle loan:

1. Up to 80% for new vehicles 2. Up to 50% for second hand cars 3. Interest rate @10% p.a.

4. Processing fee of 1% flat front end on the loan amount. 5. Tenure up to 5 years

6. Any brand of passenger car for private use 7. Fast track processing

f) Bills Purchase

Bills purchase is facilitate to discount cheque. When the cheque of other bank is presented at NIBL for collection, it takes two/three days for clearing. So before clearing the cheque, client may need cash, in this case, bank will provide the amount of cheque in demand of clients with the interest of 0.15% of the amount or Rs. 150 (whichever is higher)

g) Trust receipt

Trust receipt is the type of funded loan which enables the client company retires the document of its import L/C established with the bank. It is short term loan mature in 90 days. It is uses to support L/C. In Trust receipt, 80% of the fund is financed by bank and remaining 20% by the client himself. Client can’t physically use the cash. The interest rate in TR is:

Level one (low amount): 9.25% p.a. Level two (high amount): 9.50 p.a.

2. Non- funded loan

Non funded loan refers to those loan in which bank do not provide the cash physically, but finance in certain sectors. It is of two types:

a) Letter of Credit

Letter of credit L/C is the form of non funded loan provided by NIBL. It is provided for import and export of trading items, mainly import. In international trade goods can be ordered through internet. But it is not guarantee that the customer will pay the amount of goods to the creditor after receiving the goods.

Figure

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